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United States ex rel. Carmichael v. Gregory

United States District Court, District of Columbia

September 30, 2019


          MEMORANDUM OPINION, [DKT. # 23]


         This Court entered default judgment against defendant Raymond Gregory ("Gregory") in this case on September 6, 2017. One year later, Gregory filed a Motion for Relief from Default Judgment Pursuant to Federal Rule of Civil Procedure 60 ("Def.'s Mot.") [Dkt. # 23]. For the reasons that follow, Gregory's motion must be DENIED.


         On October 10, 2014, the relator, Bridgette Carmichael ("Carmichael"), sued Gregory, alleging that he had unlawfully overcharged her for rent while she was living in a residential property he owned. See Compl. ¶¶ 28-30, 47-63 [Dkt. # 1]. Carmichael and Gregory initially agreed to set her rent at $1, 800 per month. See Def.'s Mot., Gregory Affidavit ¶ 7. They submitted their proposed lease to the District of Columbia Housing Authority ("DCHA"), whose approval was necessary because Carmichael received rent assistance through the Department of Housing and Urban Development's ("HUD's") Section 8 Housing Choice Voucher Program. See Id. ¶7; Compl. ¶¶ 7-19. DCHA reviewed the lease, lowered the monthly rent to $1, 603, and prescribed how much of the $1, 603 Carmichael would be responsible for paying each month. See Def.'s Mot., Gregory Affidavit ¶ 8; U.S. Opp. to Def.'s Mot. for Relief from Default J. ("Opp. to Def.'s Mot."), Ex. A [Dkt. # 26]. Gregory and Carmichael expressly accepted DCHA's changes. They executed a contract that provided Gregory could not charge more than $1, 603 in monthly rent without DCHA approval. See U.S. Compl. in Intervention ¶ 38 [Dkt. # 12]. And DCHA never approved a rent increase during Carmichael's tenancy. See United States ex rel Carmichael v. Gregory, 270 F.Supp.3d 67, 69-70 (D.D.C. 2017) ("Gregory 7").

         In her complaint, Carmichael alleged that, despite the express agreement, Gregory increased her rent to an amount that exceeded the DCHA-approved amount, and charged her excess rent every month from October 2008 through August 2013. See Compl. ¶¶ 37-40. Her allegations are supported by two leases, signed by both Gregory and Carmichael, that reflect rents that were never approved by DCHA. The first lease, effective October 1, 2008, sets Carmichael's rent at $1700 per month. See Mot. for Default J., Ex. 6 [Dkt. #17]. The second, effective July 6, 2012, sets rent at $1653 per month. See id., Ex. 9.

         Carmichael's complaint alleges that, by overcharging her for rent, Gregory violated the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., and thereby unjustly enriched himself.[1] See Compl. ¶¶ 47-63. The FCA, she contends, is implicated by the fact that Gregory, after overcharging Carmichael, endorsed housing assistance checks and then presented them for payment. See Id. ¶¶ 47-57. Presenting the housing assistance checks for payment constituted "requests to DCHA for payment of federal funds provided by HUD." Gregory I, 270 F.Supp.3d at 71. Doing so after falsely certifying compliance with the terms of the housing assistance program violates the FCA. See id.; Doe v. Gormley, No. 15-2183, 2016 WL 4400301, at *5 (D. Md. Aug. 17, 2016) (collecting cases).

         Because Carmichael brought her suit under the FCA's qui tarn provisions, the United States ("the Government") had a right to intervene as a party. See Compl. at 1; 31 U.S.C. § 3730(b)(2). The Government elected to exercise that right on September 23, 2015, see U.S. Notice of Election to Intervene [Dkt. # 9], and filed its Complaint in Intervention on March 25, 2016. The Government's complaint alleged two claims against Gregory, both for violating the FCA. See U.S. Compl. in Intervention ¶¶ 52-65.

         Gregory did not answer either complaint. As a result, on May 18, 2016, the Clerk of Court declared him in default. See Gregory I, 270 F.Supp.3d at 70. On February 17, 2017, the Government and Carmichael moved for entry of default judgment on the first FCA claim in the Government's complaint. See Mot. for Default J. at 1 & n.1, 18. And on September 5, 2017, 1 granted that motion. See Gregory I, 270 F.Supp.3d at 72. I found that "Gregory was served [with process] on January 26, 2016," and that "the well-pleaded facts in the United States' complaint are sufficient to establish liability for violations of the FCA." 70-71. I then "enter[ed] default judgment in favor of the United States in a total amount of $587, 999.00." Id. at 72. Carmichael, in turn, was awarded "15 percent of any sums collected by the United States," as she was entitled under the FCA's qui tarn provisions. Id.

         Exactly one year after default judgment was entered, Gregory appeared for the first time in this action by filing a motion to vacate the default judgment under Federal Rule of Civil Procedure 60. See Def s Mot. at 10. Gregory somehow claims to have not received actual notice of this proceeding until the Government served him with a Notice of Default in May of 2016. See Def.'s Mot., Gregory Affidavit ¶ 19. After learning of his default, Gregory retained H. Caleb Griffin to represent him. See Def.'s Mot., Griffin Affidavit ¶¶ 1-5. Griffin neither appeared in, nor filed any paper related to, this case until September 6, 2018-more than two years after he was retained-when he filed Gregory's motion to vacate the judgment. In an affidavit, Griffin provides several personal and professional reasons that delayed his appearance. See Id. ¶¶ 9-19. The reasons range from his need to seek admission to this Court's bar, to a lack of professional resources, to deaths in his family. See id.

         In his motion, Gregory argues that the default judgment should be vacated under Rules 60(b)(1), 60(b)(3), and 60(b)(6) because his failure to answer was the result of excusable neglect, because the judgment is based on misrepresentations made by Carmichael, and because the judgment imposes harsh consequences.[2] See Def.'s Mot. at 5-11. The Government opposes all three of Gregory's theories for relief. See Opp. to Def.'s Mot. at 12-21. And ultimately, I have similarly concluded that Gregory is not entitled to Rule 60 relief under any theory. How so?


         I. Gregory Has Not Established a Potentially Meritorious Defense.

         In our Circuit, "a potentially meritorious defense is a precondition for Rule 60(b) relief." FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 447 F.3d 835, 842 (D.C. Cir. 2006). This requirement ensures "that vacating the judgment will not be an empty exercise or a futile gesture." Id. (quoting Murray v. District of Columbia, 52 F.3d 353, 355-56 (D.C. Cir. 1995)). It does not impose "a high bar" on movants: "even a hint of a suggestion which, proven at trial, would constitute a complete defense" will suffice. Marino v. DEA, 685 F.3d 1076, 1080 (D.C. Cir. 2012) (quotation marks and citations omitted). But "the party seeking to invoke Rule 60(b), bears the burden of establishing that its prerequisites are satisfied." Owens v. Republic of Sudan, 864 F.3d 751, 819 (D.C. Cir. 2017) (quotation marks and citations omitted). And "proposed . . . defenses [that] 'amount to nothing more than conclusory denials'" do not carry that burden. Nat'l Rest. Ass 'n Educ. Found, v. Shain, 287 F.R.D. 83, 88 (D.D.C. 2012) (quoting Gillespie v. Capitol Reprographics, LLC, 573 F.Supp.2d 80, 87 n.l 1 (D.D.C. 2008)). The only evidence that Gregory attaches, however, to his Rule 60 motion is bank statements from 2012 and 2013, an affidavit reciting Gregory's side of the story, and correspondence regarding Carmichael's claims against him. See Def.'s Mot., Exs. A-F & Gregory Affidavit. This evidence, however, is either consistent with Carmichael's allegations or entirely conclusory. To say the least, it does not establish a potentially meritorious defense.

         Gregory's bank statements, for example, are consistent with Carmichael's claims that she was overcharged for rent. The statements date back to June of 2012, when Carmichael's DCHA-approved share of the rent was $18 of the $1, 603 total. See Opp. to Def.'s Mot., Ex. A. According to Gregory's submission, Carmichael paid him $140 that month, almost ten times what she owed for the month's rent. See Def.'s Mot., Ex. A. The next month, July 2012, Carmichael's approved share of the rent increased to $238 per month. See Opp. to Def.'s Mot., Ex. A. She also signed a new lease with Gregory in July 2012, setting the overall rent for the residence at $1, 653 per month, $50 higher than what DCHA approved. See Mot. for Default J., Ex. 9. Several ...

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